tv The David Rubenstein Show Peer to Peer Conversations Bloomberg October 29, 2016 9:00am-9:31am EDT
step down and smell the flowers little bit more? >> would you fit your tie, please? >> people would not recognize me if my tie was fixed. i will stay with it this way. >> i don't consider myself a journalist. nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running up -- a private equity firm. how do you define leadership? somebodyt that makes --tick? with lloyd blank and fein. , who has been the chairman
and ceo of goldman sachs for 10 years and i do not think any of your predecessors in the last two decades stayed that long, is that right? lloyd: it seemed that way but it was not that long. david: you grew up in new york city and when you were growing up you did not have a lot of money. was money in a thing you were growing up, wanting to have money, what were you interested in? lloyd: i went to school with kids that were like us. i did not know with a range of possibilities were, i did not know that we were -- brooklyn?w up in david: your father worked as my father did in the post office. their job was to file the mail. not to deliver it. sort the mail. you were not wealthy and you went through public schools. you obviously did pretty well because you were valedictorian. >> ranking high in my school meant that i was good at school, but i did not know how smart it was or how i could compare. by the way being good in school , and being smart were two different things. david: did you ever think about not going because you could not afford it or did not fit in?
lloyd: my older sibling did not go to college either. it would not have occurred to me to apply to that fancy a school. i knew i was going to go to college but i did not assume, i did not know what it would have been. i remember reading, kids were at school. i read the whole book to my did -- i did not know what a prep school was. i know what it is now but i did not know with those things were so it was not like i had expectations. i know that no other kid from thomas jefferson high school went to the ivy league but someho application . i was not that spectacular, it was not like i had perfect board scores or everything. i do not know what made them want to invest but they did. i got there and i was grateful. debbie: when you got there did , you say these kids are smarter than me or not at smart?
floyd: i had to get over the idea that this was a different planet. the first thing i did and my parents took me to something called the mail shop in brooklyn . they bought me three sports jacket, five pairs of slacks, burnt orange, with a light blue double-breasted jacket. i would not say that i fit the demographic, but when i got to harvard, circa 1971, i am sure my roommates from new england prep school community looked at me like i was from some foreign planet. i was nuanced enough to tell that they were looking at me like i was some different species. david: were you an athlete or scholar? void: -- lloyd: i was a swimmer in high school, i could never have been good in college.
i went there and try to do that, i was not going to be any good area david: you did not try out for the swimming team? i heard you say you are still swimming. lloyd: the other kid who started with me were out showered and went to class. i went from there to the boathouse to another sport. david: when did you decide you want to go to law school? lloyd: i was 16. i was also young and by the time i got, sorted things out, i took some science courses, i am not sure what i wanted to do. i toyed with the idea of being an academic. i was a good student but not that good a student. it dawned on me i need to past in loans and earn a living. i thought it would be a
professional, i apply to law school and a lot of people just walked down the block and went to law school. i went to harvard law school. david: you went to new york law firms. lloyd i applied to new york law : firms and a got job offers it some and i did not get job offers and others. david: you went up at [indiscernible] lloyd: there was another firm that hired me and i accepted a job, this is a top notch new york law firm and their tax department, i got a call from them and some months had gone by and they told me, they said we will move you, we have over hired and we will move you to the corporate department. i said, i want to be a tax lawyer. they say we have over hired and we do not have a slot. tell me, how many slots do you have and they said four. i said how many people did you hire for tax? they said five. sunset, let me get this straight. i am fifth on your list of four people for this job. we do not look at it that way. i said, i can't come and work
for you. there was another firm that had i signed up with. and i went with them. i got thrown onto cases, the interesting cases involving the entertainment industry. i moved it for two years out to california, i lived in l.a. leisureyou wearing suits? lloyd: no. everybody else in california was wearing white cloth and took his and it was stepping over them on a saturday morning in a three-piece suit. i realized it was a little bit out of sync as a corporate lawyer. david: i was not a good lawyer, my clients made that clear. your clients may have been different. lloyd: a number of my friends were going to finance jobs.
at that point, it was not the be all and and all. end all. -- the job i took paid less money than what i was making. i was a fifth-year associate and it was starting over in another firm. i applied and i did not know a lot about them but i had a job interview at morgan stanley and dean witter was another firm. i got turned down. a lot of people were applying, there was no reason to grab onto me. it may have been acquired by goldman. it was a separate company and manage separately and eventually as a result i started getting integrated into goldman sachs. david: have you met the person who turned you down? lord: i knew who it was. david: is that person still here -- lloyd: i knew who it was.
david: is that person so here? lloyd this is 36 years ago. : for many years after i i got there, there would be no one threatened by being at odds with me. it's me a while to work my way up the letterhead. david: did you feel like you are ready to be the ceo of goldman --sachs? ecc lloyd: i am not sure i feel ready to be the ceo of goldman sachs.
david: you wound up as the vice chair of goldman sachs. lloyd: it was not so quick. i got more involved in the equity business and sales and trading and over time i became the vice chairman of the firm, one of several that my particular coverage was over all the sales and trading businesses at that time. david: the trading business is the one where you can lose a lot
of money very quickly. i assume you were worried about people under you making a mistake. lloyd: it is good training for the job i am in now. i spent 99% of my time worrying about the 1% of things that could go wrong. leveraged two things that are normally not virtues but are in this context, it leveraged my add and paranoia. david: when you became vice-chairman you were under hank paulson, who is the ceo. he seemed to like it and then george w. bush persuaded him to become secretary-treasurer. when he came back with a meeting with george bush, what did he say to you and did you feel he -- feel like you were ready to be the ceo of goldman sachs? lloyd: i never felt like i was ready to be the ceo. i have been the ceo for 10 years and i am still not sure i'm ready to be the ceo of goldman sachs. it was a conversation, we kind of knew he was being asked to do
that job. he came back and talked to me. i was hyperventilating to be the ceo. i was in the last job i could be in. other things opened up by i reported to people and my contemporaries why did not think i was going to keep rising and quirky things happened that made room for me. he told me he was offered this position and he planned to stay in the firm. there was still a possibility that when he did the math, i would still be young enough. i said it is not like i am waiting to take your seat. it was fine. notwithstanding him saying that, i guess he got another call to go in and decided to take the job. no big surprise to me. david: you became the ceo. lloyd: hank is an intense guy,
works seven days a week, 24 hours a day. i did too. i had to go down to washington, there would be an announcement of the day after memorial day in the rose garden and it want you to fly down with me so i could discuss the transition. president bush: i am pleased to announce i will nominate henry paulson to be the secretary of the treasury. lloyd: i was thinking i need to discuss the transition to me. he was discussing his transition on his next job. i couldn't keep waiting for him. all we were talking about was his transition. his head was in another place. david: he took the job, you'd got the job, and the u.s. economy went south. it is fair to say. we went into the great recession. so when did you realize the , economy was heading further south than anyone had thought it possibly could? lloyd: we were worried about the risk profile of the institution, what was going on and to tell you the truth, in hindsight,
everybody knows everything and everybody remembers having known everything. but in reality, every day that something was happening it was an incremental thing happening. david: you and the other ceos of major wall street banks were called down to hank paulson's office and he said i will make -- $50 billion to shore up your balance sheet. was that something you wanted to do? lloyd: it would be hard to remember. i think i am pretty good at it. we're always evaluating people's performance and trying to -- you are a second guesser. remembered what i was thinking. i remember thinking at the time that this would make things safer and i had an element of relief about it.
it was there a level of risk out there that i would have been comfortable? we spent money in our personal lives to ensure ourselves against very remote risks. it was more than a remote risk at that point. not a certainty, but certainly a non-remote risk that there would be a domino effect and things would cave in and it would spiral out of control. the fact that, do do you need to have it done? not necessarily. but do you eliminate a risk that should not have been born? the answer is yes. the only thing we know is the world did not spin out of control. i will just say as a risk manager kind of person, i can -- can't tell you that it needed to have been done. but people were going to sleep at night with much more risk and responsible people should have taken with the global economy. david: people seem to blame goldman for more of the sins of wall street than they blamed anybody else. why do you think that was and do you think it was fair? lloyd: there was a number of
factors, one, you can't escape the first factor which is that we were very involved. obviously for all the advice, no one was asking us for a device on how to manage our public relations. you were just flat-footed. we have been in institutional form for all our life, we did not have a relationship for the american public. we did not have a consumer business. we became for time a symbol of the mortgage business, we did not originate in mortgages. we bought mortgages from other firms and to an extent if you are buying mortgages from another firm, you're giving them cash to go out and do more mortgages so we are an enabler of behavior. and the accusation was and it was born out by settlements that we agreed to a set of facts that we might not have done the due diligence on mortgages we acquired and sold to other people. so that is one factor.
issue that wehe managed our risk ready well in that crisis. whereas a lot of firms out there billions of dollars as firms and individuals got wiped out. we obviously did not make money in the crisis but we did not lose money in the crisis so we came out relatively unscathed and looking like we needed to be punished in other ways. david: goldman has been much more involved in philosophic activities. is this in response to some of the image issues? lloyd: i would say historically goldman sachs has been philanthropic throughout our lives and i became a part, i was taken aside and they say at the end of your life, someone writes an obituary, there are nine paragraphs, no more than three
should talk about goldman sachs, they should have a more diverse life. like public service. i would say in general we never publicized what we did anywhere. we never see commercials or even our name on our building. we realized one of the things we needed to do is we did not communicate enough with the public to let them know who we were and what our contribution was to society that was not an emphasis to say, we are entrepreneurial. we have never not been philanthropic. david: you have been involved in a number of philanthropic things yourself. would you ever follow your predecessors? lloyd: i have been asked that question and without hesitation, i would like to be wanted to do that. i would have to think about it. in this environ, i would say you will not argue with me on the point that the invitation is likely to come --
david: you never know. lloyd but you never know. : i am not soliciting it that it would be crazy, other people would say, i would not want to do that. of course you want to make a contribution. david: how do you define leadership and what are the examples you have in your mind of what it takes to be a great leader? lloyd: i think different institutions at different times require different things. you have to be optimistic but not so much that you lose credibility. you have to be willing to take a punch. you have to be if not charismatic, you have to be articulate. you have to explain to people and bring them along. you have to get people to behave well. i said in the crisis to people the remember -- act well now. i said that to my partners because people are going to remember forever how you acted at this critical time. so think about it because your rep -- because we are going to get through this and your reputation will stay with you forever. david: did you go for a second
david: about a year or so ago, you were diagnosed with lymphoma. how did you deal with that when you learned treatment was necessary? did you think about stepping back from goldman? lloyd: i started having symptoms, they were problems that were easily explained. i had a cough but they were summer allergies i thought. i had aches and pains when i have beenbut i never this age before. i started to lose weight but i am always trying to lose weight. i thought it was unusually disciplined this time around. when i collected all that stuff by went in to see a doctor. he did not think to test me for what i had come up prescribed
medicine and a couple of weeks later i took a cat scan and that lit up like a christmas tree and he called me up and i had lymphoma. david: does he say, we can treat it and there is no big problem, just a matter of treatment or did he say this could be life-threatening? lloyd: it is life-threatening for sure. there are 70 different kinds, each one carries with it its own risks. i had the more aggressive type which is dangerous, more dangerous because if you do not get cured. on the other hand, it is curable. david: you had to go in three or four days for chemo. lloyd the treatment i had was six week cycles. for three weeks, six times on a cycle basis, the first foreign avenue days of the cycle, 498 hours or so, i would be getting chemo night and day continuously.
david: did you go for second and third opinion or did you say aim comfortable with the initial prescription? lloyd: it is funny, i do not -- you do not know how to react to things until you move through them. i -- my whole life is about risk management and due diligence. when this happened it was so quick that i knew when i had the cat scan, i knew i had lymphoma but i did not know what type. i had to have a biopsy. which is general surgery and that takes a week to figure out what you have and the way these things work and the peculiarity of being the ceo of a public company is you cannot tell anybody until you tell everybody. and so my wife and i could tell nobody. when i did so during this time including up until on the way to the hospital to get the biopsy, i had a press things scheduled, a televised thing with a lot of reporters and the audience to my way into the hospital and had the biopsy and waited five days and went to get the results of the report, the thing was
advanced, it was so mandated what the treatment would be i literally went upstairs from the doctor who delivered the results to me right upstairs to strip on -- strap on the first of the chemo treatments. i did not get a second opinion. david: the treatment has been now been completed. now that you have had this, you are in remission? lloyd: right. david: that means you are subject to being hurt again. lloyd: i should have been worried before i knew i had a problem. i should have been worried i would get it for the first time and now i am on the edge because i'm worried about getting it for the second time. if i had them better i would worry about getting it the first time. david: when you heard about the prescription and what you had and the necessary medication you think life would be different for me and i should step down as ceo and smell the flowers a bit more or you did not think about that? lloyd: i am very reality-based. maybe i am not that spiritual. i don't know. i just got the news, the news of
what type of lymphoma, i got on the telephone and people said, how jarring was that? and it is a funny way to think about it. i am kind of a fatalist in some ways. i said every time i had gotten physical and the doctor called them is nothing wrong with me, i was shocked. finally, somebody called me up and said something is wrong and i said par for the course. david: when i first met you you , did not have a beard and the -- now you grew a beard. lloyd: it shaved itself when i had the treatments. it grew back. it is a sign that i have gained. for my wife, it was symbolic to allow the beard to restore -- reassert itself. david: when you do leave, what
would you like to be your legacy? lloyd: i am not a founder. goldman sachs was a great firm when i got here and hopefully it will be a great from when i leave. and so what i want to contribute , is i want to make, i want to leave the firm at least as good, but let me be more ambitious. stronger than it was when i found it, more influential, important, but given what we had to work her way through, i would like to leave the firm also viewed as important in a positive influence on the american economy and culture. and so we still have some work , left to do. ♪
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